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  • FIRST POST
    • TipsyTaylor
    • By TipsyTaylor 11th Oct 17, 1:11 PM
    • 48Posts
    • 6Thanks
    TipsyTaylor
    Claiming Travel Expenses (Employer and Employee)
    • #1
    • 11th Oct 17, 1:11 PM
    Claiming Travel Expenses (Employer and Employee) 11th Oct 17 at 1:11 PM
    Hello everyone,

    Apologies if this has already been covered elsewhere, but I cannot see a thread and the question is fairly specific, so I think I am OK.

    My wife is currently working freelance for two companies, with one covering her travel costs into the city (London) three days a week. She supplies the company with her train tickets, when she invoices them every two weeks, but are we able to still claim back the travel cost against her tax bill? We are able to show how much this has cost, as everything is paid with a card, but we do not have the physical ticket.

    Are we also affected if the company she is freelancing for are using the tickets to claim against their own tax?

    If we are not able to claim against this, is there any other advice anyone has? As the travel costs amount to about five and a half thousand pounds a year that is otherwise going to be viewed as part of her salary (I think?).

    Regards,

    Liam
Page 1
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 11th Oct 17, 2:29 PM
    • 2,903 Posts
    • 1,658 Thanks
    TheCyclingProgrammer
    • #2
    • 11th Oct 17, 2:29 PM
    • #2
    • 11th Oct 17, 2:29 PM
    If the company has agreed to cover the cost of her travel, then she should invoice them for the cost of the tickets as part of her services. She may choose to show these itemised separately if she wishes. Whether or not she has invoiced for the cost of her travel has no effect on whether she can claim the cost of the tickets to reduce her tax bill.

    The tax deductibility of business travel can be complicated and the rules are different if you're self-employed or work through a Limited company but for arguments sake lets assume that the travel is business travel and not ordinary commuting and therefore is tax deductible. In which case, she can claim the costs of the travel to offset her income when calculating her tax. The net result being that the gross profit from that invoice is the cost of her services (as her expenditure on the tickets cancels out the same amount she has invoiced).

    If you'd like more input onto whether or not the travel is tax deductible you'll need to post a bit more information (is she self-employed/working under a Ltd company/how long is her contract etc.).

    Her client is entitled to see a copy of the tickets if they require evidence of the expenditure but your wife should also keep a copy of any receipts too for her own records if she is claiming them as a tax deductible expense. If she doesn't have receipts, a travel log and corresponding bank statements showing payments to a train company should be sufficient evidence of the expense being incurred.

    Finally, if your wife is VAT registered, she should charge VAT on the full value of her invoice including the cost of the tickets (the same goes for any recharged expenses that are not disbursements).
    • TipsyTaylor
    • By TipsyTaylor 11th Oct 17, 4:26 PM
    • 48 Posts
    • 6 Thanks
    TipsyTaylor
    • #3
    • 11th Oct 17, 4:26 PM
    • #3
    • 11th Oct 17, 4:26 PM
    If the company has agreed to cover the cost of her travel, then she should invoice them for the cost of the tickets as part of her services. She may choose to show these itemised separately if she wishes. Whether or not she has invoiced for the cost of her travel has no effect on whether she can claim the cost of the tickets to reduce her tax bill.

    The tax deductibility of business travel can be complicated and the rules are different if you're self-employed or work through a Limited company but for arguments sake lets assume that the travel is business travel and not ordinary commuting and therefore is tax deductible. In which case, she can claim the costs of the travel to offset her income when calculating her tax. The net result being that the gross profit from that invoice is the cost of her services (as her expenditure on the tickets cancels out the same amount she has invoiced).

    If you'd like more input onto whether or not the travel is tax deductible you'll need to post a bit more information (is she self-employed/working under a Ltd company/how long is her contract etc.).

    Her client is entitled to see a copy of the tickets if they require evidence of the expenditure but your wife should also keep a copy of any receipts too for her own records if she is claiming them as a tax deductible expense. If she doesn't have receipts, a travel log and corresponding bank statements showing payments to a train company should be sufficient evidence of the expense being incurred.

    Finally, if your wife is VAT registered, she should charge VAT on the full value of her invoice including the cost of the tickets (the same goes for any recharged expenses that are not disbursements).
    Originally posted by TheCyclingProgrammer

    Thank you 'TheCyclingProgrammer'. I also posted this in another category (was advise to post in here afterwards) and I think I was coming at this from the wrong angle. My wife supplies an invoice with her day rate and travel costs separated, and the company reimburse her for the travel. So, I am told that the travel element of the invoice is not a taxable income.
    • Tammykitty
    • By Tammykitty 11th Oct 17, 4:34 PM
    • 545 Posts
    • 1,167 Thanks
    Tammykitty
    • #4
    • 11th Oct 17, 4:34 PM
    • #4
    • 11th Oct 17, 4:34 PM
    Thank you 'TheCyclingProgrammer'. I also posted this in another category (was advise to post in here afterwards) and I think I was coming at this from the wrong angle. My wife supplies an invoice with her day rate and travel costs separated, and the company reimburse her for the travel. So, I am told that the travel element of the invoice is not a taxable income.
    Originally posted by TipsyTaylor

    Technically, it isn't taxable income - as its the profit from the business that is actually taxable income.


    So if our wife bills £60k per year to a client and £5k of this is travel, and she has no other businesses expenses her taxable income is £55k.


    The taxable income is:
    Actual Income (Invoiced or received)
    Less:
    Business Expenses - (Including but not limited to)
    Travel
    Insurance
    Home as office
    Professional Subscription
    etc


    This then equals Taxable income


    PS - it is unlikely to be a employer/employee relationship if your wife invoices her "employer"
    Last edited by Tammykitty; 11-10-2017 at 4:41 PM.
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    • Pennywise
    • By Pennywise 11th Oct 17, 4:36 PM
    • 9,416 Posts
    • 17,125 Thanks
    Pennywise
    • #5
    • 11th Oct 17, 4:36 PM
    • #5
    • 11th Oct 17, 4:36 PM
    So, I am told that the travel element of the invoice is not a taxable income.
    Originally posted by TipsyTaylor
    It IS taxable income as it's added to her gross sales income, but at the same time, it's also a tax deductible expense, to be shown under "cost of sales", so there is no tax effect overall. You can't claim it as an expense if you're wrongly not declaring it as income. In=Out so tax neutral overall.

    You have to add VAT to all expenses as well as the time invoicing if vat registered.

    She needs to add it to her sales invoices - whether or not she attaches receipts is up to her/her client.
    • TheCyclingProgrammer
    • By TheCyclingProgrammer 11th Oct 17, 8:39 PM
    • 2,903 Posts
    • 1,658 Thanks
    TheCyclingProgrammer
    • #6
    • 11th Oct 17, 8:39 PM
    • #6
    • 11th Oct 17, 8:39 PM
    Thank you 'TheCyclingProgrammer'. I also posted this in another category (was advise to post in here afterwards) and I think I was coming at this from the wrong angle. My wife supplies an invoice with her day rate and travel costs separated, and the company reimburse her for the travel. So, I am told that the travel element of the invoice is not a taxable income.
    Originally posted by TipsyTaylor
    The invoiced costs are part of her turnover like any other sales.

    However if the travel is tax deductible then the tax relief on the original expense cancels out the invoiced amount, reducing the taxable profit.
    Last edited by TheCyclingProgrammer; 11-10-2017 at 8:42 PM.
    • bobsp
    • By bobsp 13th Oct 17, 2:48 PM
    • 19 Posts
    • 0 Thanks
    bobsp
    • #7
    • 13th Oct 17, 2:48 PM
    • #7
    • 13th Oct 17, 2:48 PM
    This maybe different, I travel, alot through work.

    I have to pay up front, flights, hotel, meals etc, then I submit my expenses, they pay and I pay off my credit card.

    It probably totals around 25k a year.

    I am employed by them, not freelancer or self employed.
    • 00ec25
    • By 00ec25 13th Oct 17, 2:55 PM
    • 5,557 Posts
    • 4,947 Thanks
    00ec25
    • #8
    • 13th Oct 17, 2:55 PM
    • #8
    • 13th Oct 17, 2:55 PM
    This maybe different, I travel, alot through work.

    I have to pay up front, flights, hotel, meals etc, then I submit my expenses, they pay and I pay off my credit card.

    It probably totals around 25k a year.

    I am employed by them, not freelancer or self employed.
    Originally posted by bobsp
    it is "different" ... it is irrelevant in the context of the OP

    all you have done is describe a perfectly normal expenses system used by any employee incurring business related expenses whilst undertaking the duties of their employment for their employer
    • bobsp
    • By bobsp 13th Oct 17, 4:10 PM
    • 19 Posts
    • 0 Thanks
    bobsp
    • #9
    • 13th Oct 17, 4:10 PM
    • #9
    • 13th Oct 17, 4:10 PM
    it is "different" ... it is irrelevant in the context of the OP

    all you have done is describe a perfectly normal expenses system used by any employee incurring business related expenses whilst undertaking the duties of their employment for their employer
    Originally posted by 00ec25
    Ok thanks.
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